Author: CNBC Online news

China says it will suspend additional tariffs on US autos

China to suspend tariffs on US automobiles and auto parts
6:46 AM ET Fri, 14 Dec 2018 | 03:49

China has said it will temporarily halt its additional 25 percent tariff on vehicles made in the United States.

The relief will last for three months staring from January 1, as part of an agreed truce between Beijing and Washington.

The Chinese finance ministry said on its website that China will suspend 25 percent tariffs on 144 vehicles and auto parts originating from the U.S. and 5 percent tariffs on an additional 67 auto items.

U.S. President Donald Trump and President Xi Jinping agreed to lessen the impact of trade tariffs for the first 90 days of 2019, following a dinner in Argentina on December 1.

The U.S. has slapped a 25 percent tariff on finished vehicles built in China and 10 percent on most auto parts. China's 40 percent tariff on U.S. car imports will now reduce to 15 percent for 90 days.

That brings the auto tariffs in China back down to the same level as before the point that the two countries began imposing tit-for-tat levies.

Tariffs help the big three?

Ina note released Thursday, auto analysts at the Swiss bank UBS said trade risks continue to linger and that under their worst scenario, U.S. sales could slump by as much as 12 percent.

But UBS highlighted Ford, General Motors and Fiat Chrysler as potential winners should tariffs prohibit imports, as all three have capacity to boost domestic production.

Meanwhile, auto sales in China fell 14 percent in November over the same month in 2017, the Chinese Association of Automobile Manufacturers said Tuesday.

That slowdown, while part blamed on the trade war, is also reflective of Chinese domestic demand losing steam.

And Anna-Marie Baisden, head of autos research at Fitch Solutions told CNBC on Friday that getting a tariff deal in place may not spark fresh demand.

“Lowering tariffs might not actually make a big difference because the Chinese market is slowing anyway so even domestic brands are suffering,” she said via email.

European auto stocks hit hard

Auto stocks in Europe were among the leading losers on Friday following a steep drop in the number of new car registrations.

European car sales dropped 8.1 percent in November, falling for the third straight month after the introduction of a new emissions-testing regime in September.

The Stoxx 600 Autos sector dipped 2.2 percent following the data but has since pared losses. At 6:02 a.m. Eastern Time, the index of major European auto and auto-supplier stocks was lower by 1.4 percent.

China Daily | Reuters
Employees assemble vehicles at a plant of SAIC Volkswagen in Urumqi, Xinjiang Uighur Autonomous Region, China September 4, 2018.

For new car registrations, Renault led the declines with sales falling by 16 percent, while Volkswagen and Fiat Chrysler also posted disappointing numbers.

Over the summer, auto dealers had offered incentives to empty stock before new emissions rules came into effect, according to the European Automobile Manufacturers' Association (ACEA).

“Ahead of the introduction of the new WLTP test in September, car registrations jumped by 31.2 percent in August, which has led to a drop in demand in the following months,” the ACEA said in a statement Friday.

The EMEA added that car demand for November had shrunk in all of Europe's five biggest markets.

Aside from the technology hurdle that prompted a summer rush of European car registrations, one analyst at Citi told “Squawk Box Europe” on Friday that said there was also evidence of a slowdown in the consumer's desire to borrow and spend.

“It is about lending conditions. It is not only the nominal rate but what kind of coverage is the bank charging on the loan,” said Luis Costa, head of CEEMEA FX and rates strategy at Citi.

Costa cautioned however that there had been no “massive tightening of lending conditions yet.”

European stocks as a whole have performed poorly Friday morning as the drumbeat of weak data has continued from China. Overnight investors learned that November's retail sales in China grew at their weakest monthly pace since 2003, hurting autos and other stocks with exposure to the country.

Tesla’s global sales director leaves for Airbnb, marking latest executive departure

Wang Zhao | AFP | Getty Images
People visit a Tesla showroom in Beijing.

A Tesla senior sales executive, Dan Kim, has left the company, according to a person familiar with the matter.

Kim, who joined Tesla in January, left for online travel site Airbnb, Bloomberg News first reported Tuesday. The job change was also reflected on a LinkedIn page that appears to belong to Kim, who was listed as the former head of global sales, marketing and delivery operations at Tesla.

Kim departed last month and his duties at the electric automaker are being handled by other people on his team, according to the person. Kim was a senior director in global sales and marketing under Robin Ren, the vice president of worldwide sales at Tesla.

Tesla declined to comment. Airbnb didn't immediately respond to a request for comment.

Prior to joining Tesla, Kim held executive roles in marketing at Solera, a company that makes vehicle analytics, according to his Wikipedia and LinkedIn pages. Before that Kim founded a chain of frozen yogurt stores called Red Mango.

Tesla has experienced intense turnover at several levels in its ranks. In September, short seller Jim Chanos compiled a list that showed the company had lost more than 40 executives in 2018. In late November, CNBC reported that Tesla's global head of security left after 11 months on the job and the company's head of digital product confirmed in December he has left the company.

Elon Musk says Tesla would consider buying idled GM plants, takes swing at the SEC on ’60 Minutes’

Getty Images
Elon Musk

Tesla would consider buying the factories that General Motors intends to idle, CEO Elon Musk said in an interview that aired Sunday on CBS' “60 Minutes.”

“It's possible that we would be interested. If they were going to sell a plant or not use it that we would take it over,” he said.

In a wide-ranging interview with Lesley Stahl, Musk made no apologies for his erratic behavior over the summer and reiterated his lack of respect for the Securities and Exchange Commission, which sued him in September for allegedly defrauding investors after tweeting that he wanted to take the company public at $420 a share and had “funding secured.” He didn't and pulled back on those plans a few weeks later.

“Nobody's perfect,” he said.

Musk acknowledged that he was “somewhat impulsive,” adding that he “didn't really want to try to adhere to some CEO template.” He stoked controversy all summer with his erratic behavior, taunting the SEC, calling a diver in the Thai cave rescue a “pedo” and capping the summer by appearing to smoke pot on the Joe Rogan podcast.

“I'm just being me. I mean, I was certainly under insane stress and crazy, crazy hours. But the system would have failed if I was truly erratic,” Musk said.

The SEC forced Musk to step down as chairman of the board for three years. The company named Robyn Denholm, who was already on the board, as chairwoman.

“I want to be clear: I do not respect the SEC,” Musk said. “I do not respect them.” But he said he was adhering to the agreement because he respects the U.S. justice system.

He scoffed at the idea that Denholm was put in place to keep him in line. “Yeah. It, it's not realistic in the sense that I am the largest shareholder in the company. And I can just call for a shareholder vote and get anything done that I want,” Musk said.

He said he does not want to return to the role of chairman. “I actually just prefer to have no titles at all.”

Tesla has struggled to ramp up production of its much hyped Model 3 midsize sedan. The company resorted to building a second assembly line inside a tent-like structure next to its main assembly plant in Fremont, California. The decision, like many Tesla has made, was ridiculed by some in the industry.

The last-minute push increased production by 50 percent, Musk told CBS.

“Those betting against the company were right by all conventional standards that we would fail,” he said, “but they just did not count on this unconventional situation of creating a second assembly in the parking lot in a tent.”

Musk said the long-awaited $35,000 version of the Model 3 will “probably” be available in five to six months. That is the price of the vehicle Tesla originally promised would be an electric sedan for the masses when it was first unveiled in March 2016. Since then, however, Tesla has only made higher-priced versions of the car.

Musk admitted he is notorious for missing deadlines.

“Well, I mean punctuality's not my strong suit. I think, uh well, why would people think that if I've been late on all the other models, that'd I'd be suddenly on time with this one,” he said.

WATCH: How taxpayers have helped Elon Musk and Tesla

How taxpayers have boosted Elon Musk and Tesla
10:06 AM ET Mon, 22 Oct 2018 | 07:43

GM's decision to idle plants in Ohio, Michigan, Maryland and Ontario and eliminate 14,000 jobs has caused anger and worry among lawmakers, labor leaders and people in the regions that depend on the factories for work. Some say GM's decision is a necessary step to ensure the company's future as it grapples with changing consumer tastes, new technologies and new potential competitors, including Tesla.

The possible plant closures present an opportunity to Tesla. It wouldn't be the first time Tesla bought a GM plant. The Tesla Factory in Fremont, California is a former GM plant that closed in 2010 but reopened later that year under Musk.

Under the terms of the SEC settlement, Musk had to pay a $20 million fine and step down as chairman for at least three years. Tesla also put in place a system for monitoring Musk's statements to the public about the company, whether on Twitter, blog posts or any other medium.

Musk told CBS the only tweets that need to be approved are ones that can move the stock price. He said he uses Twitter to express himself. “Some people use their hair,” he said, “I used Twitter.”

Expect heads to roll at Nissan over Ghosn scandal

Chesnot | Getty Images News | Getty Images
Carlos Ghosn, Renault-Nissan CEO.

It is shaping up to be a bad year for Nissan.

The arrest of auto industry titan Carlos Ghosn in Tokyo last month was believed by some to be a palace coup designed to remove him from power at Japanese automaker Nissan, just one of the companies Ghosn had a hand in running.

Now it's looking like a big problem for Nissan as well.

Ghosn was indicted Monday on allegations of underreporting income and misusing company funds, but investors weren't necessarily expecting Japanese prosecutors to slap Nissan with an indictment as well.

That could spell trouble for Hiroto Saikawa, Nissan's CEO and a onetime protege of Ghosn's, said Jefferies analyst Philippe Houchois.

Ghosn files complaint over extension of his detention
6:52 AM ET Tue, 11 Dec 2018 | 00:41

“Nissan takes this situation extremely seriously,” the company said in a statement. “Making false disclosures in annual securities reports greatly harms the integrity of Nissan's public disclosures in the securities markets, and the company expresses its deepest regret.” The company said it will strengthen its compliance efforts and improve the accuracy of its financial disclosures.

Saikawa was the one who stood to benefit the most from Ghosn's downfall. Ghosn, who was chairman of Nissan, had planned to replace Saikawa at a November board meeting, The Wall Street Journal reported. Some industry watchers say Saikawa's career at the automaker is in danger.

“I suspect Saikawa knows his days are numbered as well. Because the indictment of Mr. Ghosn today is also an indictment of Nissan,” Houchois said. In the wake of this new indictment, “it is likely heads will roll at Nissan as well.”

Nissan's shares traded in the U.S. fell 3.1 percent Monday and were down 2.7 percent in intraday trading Tuesday.

The indictment comes on the heels of scandals involving the falsification of vehicle inspection data. The automaker had to recall more than 1 million vehicles in 2017 over faulty vehicle checks, and reports filed in 2018 revealed even more misconduct.

Morningstar analyst Richard Hilgert told CNBC he thinks investor confidence in Nissan's management has been compromised by both the Ghosn scandal and the inspection fiasco.

Ghosn was in many ways the glue holding together an alliance between French automaker Renault and Japanese manufacturers Nissan and Mitsubishi. Renault saved Nissan from the brink of bankruptcy in 1999, and took a 40 percent stake in the company. Nissan, in turn, took a nonvoting 15 percent stake in Renault. But since then Nissan has become a far bigger financial contributor to the alliance, generating a lopsided share of the group's earnings. Tensions over the now two-decades-old arrangement have simmered as the relationship has grown more uneven.

Carlos Ghosn's arrest is prosecutorial overreach, says management guru
7:46 AM ET Mon, 10 Dec 2018 | 05:50

The scandal has created its fair share share of problems for Renault as well, Houchois said.

“The press has been quick to blame this on Nissan, but the reality is the governance issues are just as severe at Renault, we think,” he said.

For one thing, Ghosn was chairman and CEO of both companies for years, and he seems to have held too much power at the company.

The companies will likely have to redefine their alliance if they expect it to survive, Houchois said. He said he expects that to happen some time in the next three months or so. The problem is that there could be considerable turnover in the ranks at both companies in the meantime.

“You will have to come up with a number of new individuals who will run Nissan and run Renault,” he said.

Tesla will revolutionize consumer buying habits like Amazon and Apple, analyst says

David McNew | AFP | Getty Images
Tesla Motors CEO Elon Musk unveils large utility scale home batteries at the Tesla Design Studio in Hawthorne, California.

Wedbush Securities began coverage of Tesla shares on Friday with an outperform rating, saying Elon Musk's electric vehicle and energy storage company is now in the top echelon of 21st century technology companies.

“Tesla has evolved into one of the most dynamic technology innovators over the last 30 years and, in our opinion, has put itself into an esteemed category of companies such as Apple and Amazon that have revolutionized consumer buying habits and behaviors over the last decade,” Wedbush analyst Daniel Ives said in a note to investors.

Ives believes Tesla's value is debatable from a number of angles — such as a potential capital raise or government investigations stemming from Musk's tweets. But looking at the company as a whole, Ives said, Tesla should become “a technology titan over the coming years despite the near-term turbulence.”

“Seeing the forest through the trees we believe Tesla has the most innovative product roadmap in the technology space over the next 5 to 10 years,” Ives said.

Shares of Tesla closed Friday trading down 2.9 percent at $365.71 a share. Wedbush has a $440 price target on Tesla shares.

WATCH:How taxpayers have boosted Elon Musk and Tesla

How taxpayers have boosted Elon Musk and Tesla
10:06 AM ET Mon, 22 Oct 2018 | 07:43

Tesla cuts prices on Model X and Model S in China after Beijing reduces US auto tariffs

Tesla slashes car prices in China after tariff suspension
9:44 AM ET Fri, 14 Dec 2018 | 02:21

Tesla is slashing prices on its Model S sedan and Model X sport utility vehicle in China after Beijing suspended some tariffs on cars imported from the U.S..

The company confirmed the news on Friday.

Tariffs on U.S.-made cars and light trucks will be temporarily reduced to 15 percent from Jan. 1 until March 31, which temporarily brings tariffs on U.S. exports in line with other World Trade Organization member countries, said Kristin Dziczek, vice president of industry, labor & economics at the Center for Automotive Research.

The electric car maker has been hit hard by the steep duty on all vehicles imported to the country. The tariff on imported vehicles into China had originally been 25 percent, a policy that had been in place since China joined World Trade Organization, Dziczek said.

On July 1, the country lowered the duty to 15 percent for every other member of the WTO except the United States, she said. China then boosted the tariffs solely on U.S.-made vehicles to 40 percent on July 6 in retaliation for U.S. duties on Chinese imports.

Tesla CEO Elon Musk has been particularly vocal about the tariffs China has long levied against U.S. imports, in comparison with the mostly low tariffs the U.S. has historically charged importers.

Tesla was not immediately available for comment.

China accounted for 17.2 percent of Tesla's total revenues in 2017, but only 6 percent in the third quarter due to the impact of the tariffs, said CFRA analyst Garrett Nelson.

US auto sales are expected to drop below 17 million for first time since 2014

Getty Images
A man walks by new vehicles at a Queens auto dealership in New York City.

U.S. auto sales are tumbling further and further away from record highs hit just a few years ago.

Automakers are projected to sell 16.8 million passenger vehicles in 2019, a 1.1 percent decline from this year and below 17 million for the the first time since 2014, according to the National Automobile Dealers Association's annual sales forecast released Thursday. U.S. sales eclipsed 17 million in 2015 for the first time since the recession, peaking at 17.6 million vehicles sold in 2016. They've been falling ever since, and they are expected to continue that trend next year.

Higher interest rates and a bevy of new cars coming off lease stand to push more customers into the used market in 2019, said Patrick Manzi, senior economist for the trade group.

For 2018, car dealers are expected to sell 17 million vehicles, a better year than the industry had anticipated.

“This was a little bit unexpected,” Manzi said on a conference call on Thursday. “If you had asked me at the beginning of the year, I was expecting new vehicle sales to fall off more than they had. But then the new tax law was passed. The new tax law put more money in the pockets of consumers including the average new vehicle consumers. And many went out and purchased new vehicles.”

Car buyers mostly purchased light trucks, cross-over vehicles, pickups and SUVs, he said.

But with rising interest rates, dealers are growing concerned about “price creeping” that could keep some buyers out of the market, said NADA Chairman Wes Lutz, who is also president of Extreme Dodge-Chrysler-Jeep-Ram in Jackson, Michigan.

Falling incentives and rising rates could put “tremendous” pressure on consumers' monthly payments, he said, adding that interest rates remain a “wildcard.”

Average interest rates on new-vehicle financing have risen 60 to 70 basis points from 2017 through the third quarter of 2018, Manzi said. That has dramatically the cost of borrowing, he said, and he expects interest rates to continue to rise, though there has been some speculation that the frequency of rate increases may slow.

“Customers who are returning to the store this year and may have leased a car or purchased a car three to four years ago at a very low interest rate and are hoping to keep their payment roughly the same will not be able to do that, because the cost of borrowing has gone up considerably,” he said.

The other side of this of course, is that record sales over the last few years mean used car lots are stocked with robust inventories.

The other big trend is the staggering shift from passenger cars to crossovers and truck-based vehicles that has taken place over the last several years. Automakers have been scrambling to realign portfolios around the shift. Earlier this year, Ford said it will essentially stop selling traditional passenger cars in the U.S. altogether, except for its Mustang sports car.

“As someone who likes to drive sedans, I am a little concerned because there are fewer and fewer choices out there,” Lutz said. However he added that the breadth of choice in SUVs far surpasses what was available several years ago.

General Motors said in November it plans to slash production at several U.S. factories that focus on making passenger cars, such as the Chevrolet Cruze mid-size sedan. The decision has labor leaders and lawmakers in Ohio, Michigan, and Maryland up in arms.

Light trucks are on track to account for about 70 percent of all sales, with cars dropping to 30 percent, NADA said. A decade ago, car sales represented 52 percent while light trucks, including SUVs, accounted for 48 percent of all sales.

Those vehicles tend to be more profitable than sedans and passenger cars, in part because they simply cost more. Customers are willing to spend a bit more on an SUV, crossover or pickup because they feel they are getting more for their dollar in terms of space and flexibility. While these vehicles are becoming more efficient, rising gas prices have been cited by some industry analysts as a potential catalyst for at least a partial swing back into sleeker, more efficient vehicles.

But gas prices are not expected to rise enough to make consumers panic and send them flocking back to cars, Manzi said.

“We haven't seen the bottom of the car market yet,” he said.

‘Suicide doors’ make a comeback on 80th anniversary edition Lincoln Continental

Source: Lincoln
The 80th Anniversary Lincoln Continental Limited Edition with coach doors

Once deemed dangerous, suicide doors are making a comeback on the Lincoln Continental.

Ford is celebrating the 80th anniversary of the long-lived luxury Lincoln line by making 80 cars in 2019 with the classic center-opening doors that once served as the signature of the Continental.

The doors are not just a gimmick or aesthetic flourish. By opening toward the rear of the car, they allow passengers in the rear seats to enter and exit the vehicle more comfortably. Passengers don't have to lean forward to push the door open or pull it closed, for example.

The design was featured commonly on horse carriages, hence the name “coach doors.” Over time they had come to be called “suicide doors,” thanks to the danger of the wind forcing the rear door open while driving at high speeds, according to automotive historians. This was particularly dangerous in the era before seat belts.

Lincoln unveils 80th anniversary Continental with suicide doors
2 Hours Ago | 01:14

More recent takes on the suicide door have incorporated safety features such as locking the door once the car reaches a certain speed.

Apart from the coach doors, the car's wheelbase will be 6 inches longer, which Lincoln said gives the rear seats more room. The car lights up as its driver approaches with a welcoming lighting sequence. The trim is Lincoln's best quality leathers and dash materials, its Black Label, which typically offers higher-quality materials and membership privileges, such as vehicle detailing and free car washes.

Sedans are a tough sell these days. Ford said it plans to all but stop making them over the next several years, with the exception of its Mustang sports car.

But this version of the Continental is more of a specialty sedan, and sales of those are still relatively healthy, said Robert Parker, director of marketing, sales and service at Lincoln.

“I find it incredibly interesting,” said Stephanie Brinley, an analyst at IHS Markit. “The Continental is a vehicle that has had weak sales in a difficult segment, for sure. So I think it is an effort to draw in some interest and create some buzz around the car.”

Source: Lincoln
The front interior of the 80th Anniversary Lincoln Continental Limited Edition.

Building a vehicle with suicide doors seems to be quite a lot of work for a car that doesn't sell well in the first place, she added. It is much more difficult than just dropping a new engine into the car. But she she doesn't think Lincoln will have any trouble selling every one of the limited run it's making.

It also seems to be part of a larger strategy Lincoln has taken in recent years of trying to reach far back into the brand's history in a nod to its roots as a distinctly American luxury label, she said. In recent years Lincoln has been carving out a space for itself in the luxury market by emphasizing service and making spacious, plush vehicles that drive comfortably, rather than the sportier luxury cars European makers are known for.

No specifics on the price are available yet, but Parker said it is safe to say it will be the most expensive vehicle Lincoln sells. That means it stands to cost more than $100,000, which is the price some of Lincoln's Black Label vehicles.

Lincoln first came out with the Continental as a custom luxury vehicle in 1939, but didn't add the coach doors until 1961.

“There hasn't been a conversation about product planning I have been in during all my time in Lincoln that hasn't involved bringing back coach doors,” Parker said.

Source: Lincoln
Inside the back seat of the 80th Anniversary Lincoln Continental Limited Edition.

Nissan fails to appoint a replacement for Carlos Ghosn

Issei Kato | Reuters
Passersby are silhouetted as a huge street monitor broadcasts news reporting ousted Nissan Motor chairman Carlos Ghosn's indictment and re-arrest in Tokyo, Japan December 10, 2018.

Nissan failed to name a replacement for ousted Chairman Carlos Ghosn on Monday.

Ghosn was apprehended in Japan last month over allegations that he had been under-reporting compensation and misusing company funds.

Chief Executive Hiroto Saikawa reportedly said Monday that talks to replace the embattled auto executive were ongoing, and that there was no deadline to announce a successor.

The Japanese automaker instead announced the creation of a special committee aimed at boosting corporate governance.

Nissan said Monday that the committee would beformed of independent third party members as well as outside directors, and will lay out recommendations on how to improve the firm's approval process for setting compensation for directors and creating “a healthy state of governance.”

“It has been confirmed that the proposed independent third parties are not related to or with any interest in the company, including any direct business with Nissan,” the firm said in a press statement Monday.

The future of the global auto alliance between Nissan, Renault and Mitsubishi, which Ghosn had overseen for almost two decades, has been in doubt following his arrest.

Both Nissan and Mitsubishi have ousted Ghosn, while Renault's board last week decided that he should stay in office. Last week, Renault said the board had found no irregularities in his pay packages between 2015 and 2018, and that the approval of his compensation was in compliance with the law.

Nissan said it expects to receive recommendations from the special committee by March 31, 2019.

Toyota struggles to save breakthrough Prius hybrid

Source: Toyota
2019 Toyota Prius AWDde

In an automotive industry that offers American buyers hundreds of different options, few models have the immediate name recognition of the compact Toyota Prius.

When it debuted in Japan in 1997, it became the world's first mass-market hybrid electric vehicle and demand exploded when it reached the U.S. three years later.

The Prius delivered around 50 miles a gallon and had far more interior space than the typical fuel-saving minicar — all at an affordable price. That made it the best-selling car of any form in California, and the best-selling hybrid vehicle worldwide earlier this decade.

But, as an updated 2019 version of the Prius gets ready to roll into U.S. showrooms, Toyota is facing a difficult situation. Sales of the Prius have been tumbling for several years and were down 23.2 percent for the first 11 months of 2018. The new version delivers updates Toyota hopes will revive the hybrid's momentum, including a new all-wheel-drive system that could improve its appeal in the Snowbelt. But whether that will be enough is uncertain and company officials admit they're struggling to figure out what to do next.

First look

“For the next Prius we have to think about how to … separate [it] from the rest of the Toyota line-up,” Deputy Chief Engineer Koichi Kaneko said in an interview in Kohler, Wisconsin where the automaker was giving journalists a first chance to drive the 2019 model last week.

There are a variety of reasons why Toyota sold just 3,180 of its Prius hatchbacks in November. Sales of the entire Prius “family,” including a plug-in hybrid version, are running barely a quarter of its peak.

The sharp downturn in fuel prices has scuttled sales of all mileage-minded vehicles. But, as Kaneko alluded to, Toyota has also diluted the appeal of the Prius by now offering hybrid powertrain options on a variety of its more conventional models, such as the Corolla sedan and RAV4 crossover-utility vehicle.

The RAV4 is now Toyota's best-selling American model, last year nudging past the familiar Camry sedan. And some observers believe the hybrid version of the cross-over utility vehicle could out-sell Prius in 2019. As a result, many are questioning whether Toyota even needs the Prius anymore.

“Toyota can say the Prius did everything they needed,” said Stephanie Brinley, principal automotive analyst for IHS Markit, helping burnish the Japanese automaker's green credentials and proving there's a market for gas-electric drivetrain technology.

“But what do they need Prius for” anymore? Brinley quickly added. “It's difficult to walk away from a nameplate with so much equity, but it may make sense to drop it.”

For now, at least, that's not something Toyota plans to do. And the 2019 model shows that the automaker is looking for ways to revitalize the hybrid hatchback's appeal. That includes some modest tweaks to interior and exterior design responding to wide criticism of the fourth-generation model after its 2016 model-year debut.

More technology

There's also a lot more technology, something that appears to appeal to buyers of a vehicle using a high-tech powertrain. There's a tablet-sized 11.6-inch touchscreen, lots of USB ports, Apple CarPlay and the Toyota Safety Sense suite of advanced driver assistance systems, such as forward collision warning with automatic emergency braking.

But the biggest addition for 2019 is an electric all-wheel-drive system that markedly improves the Prius hatchback's grip on slick roads, as Toyota set out to demonstrate during its media preview in frigid Kohler.

The system is a simpler version of the all-wheel-drive technology found on some products, and works only at relatively low speeds, but it helps Toyota maintain Prius's position as “an affordable hybrid.” A base model starts at just $23,770, and versions with all-wheel-drive start at $26,380.

Still, Toyota officials concede that the 2019 updates aren't going to be enough to keep Prius a viable player going into a future where, as Brinley points out, virtually all products will use some form of electric drive. General Motors and Volkswagen are planning to eliminate gas and diesel drive technology entirely.

“Toyota has to be ready to respond to these trends” reshaping the automotive market and might even have to consider the possibility of either shifting to a crossover body style or adding a CUV to the broader Prius family that today also includes the small Prius C and bigger Prius V.

“I don't think Prius can be the same as before,” said Kaneko, looking forward to the gen-5 model that is just now beginning to enter the development process. “Our role is to figure out what we can do with it. We need to find a new direction.”

Though Toyota won't discuss the timing of that next model, its traditional product cadence would suggest it should reach market by around the 2022 model year. That is, of course, assuming Prius remains part of the brand's line-up. But considering how much Toyota has invested in the world's first hybrid, it clearly will be reluctant to give up on Prius without trying out every possible approach to keeping it viable.

Source: Toyota
2019 Toyota Prius AWDde